Life Technologies Announces First Quarter 2013 Results Revenue increased 2.5% to $963 million, or 4.4% excluding currency GAAP earnings per share (EPS) of $0.69, or $1.07 on a Non-GAAP basis, an increase of 8% Free Cash Flow of $148 million PR Newswire CARLSBAD, Calif., May 2, 2013 CARLSBAD, Calif., May 2, 2013 /PRNewswire/ --Life Technologies Corporation (NASDAQ: LIFE) today announced results for its first quarter ended March 31, 2013. Revenue for the first quarter was $963 million, an increase of 2.5 percent over the $939 million reported for the first quarter of 2012. Excluding the impact of currency, revenue growth for the quarter was 4.4 percent compared to the same period of the prior year. "We had a successful start to the year with strength across our Applied Sciences and Genetic Analysis business groups, including double digit growth in both our Bioproduction and Forensics businesses, which drove revenues and earnings growth above our guidance expectations," said Gregory T. Lucier, chairman and chief executive officer of Life Technologies. "Our end markets remained in line with our expectations, with strength in emerging markets and across much of Asia, and continued cautious spending in the United States and Europe, as expected. "During the quarter, we continued our rapid pace of innovation with new bioinformatics tools for Ion Torrent and software for our synthetic biology business. We also continued to execute against our strategy to expand in growth and emerging markets as we entered into new collaborations in stem cells, Rapid DNA products, and acquired our reagent distributor in South Korea." Lucier continued, "On April 15, Life Technologies and Thermo Fisher Scientific announced that the two companies had signed a definitive agreement under which Thermo Fisher will acquire Life for $76.00 in cash per fully diluted common share, or approximately $13.6 billion. We look forward to joining forces with the outstanding team at Thermo Fisher, which shares our commitment to customers, employees and shareholders." Life Technologies reported results compared to the quarter ended March 31, 2012. Results are non-GAAP unless indicated otherwise. A full reconciliation of the non-GAAP measures to GAAP can be found in the tables of today's press release. Analysis of First Quarter 2013 Results oFirst quarterrevenue increased 2.5 percent over the prior year, or 4.4 percent excluding the impact of currency. Revenue growth for the quarter was driven by strong sales from the Ion Torrent,Bioproduction and Forensics businesses, partially offset by expected declines in SOLiD^® sales and lower Research Consumables and capital equipment sales primarily due to the expected slowdown in the U.S. as the threat of sequestration impacted customer buying patterns. oGross margin in the first quarterwas 66.2 percent, approximately 40 basis points lower than the same period of the prior year. Gross margin was negatively impacted by a higher mix of Ion Torrent instrument sales, Bioproduction sales and unfavorable currency rates, partially offset by manufacturing productivity and royalties including licensing agreements. oOperating margin was 29.4 percent in the first quarter, approximately 80 basis points lower than the same period of the prior year. Operating margin was primarily impacted by lower gross margin and planned investments in emerging markets and molecular diagnostics. oThe tax rate was 26.2 percent for the first quarter. oFirst quarter EPS increased 8 percent to $1.07. oDiluted weighted shares outstandingwere174.5 million in the first quarter, a decrease of 8.6 million shares over the prior year. The decrease was a result of the company's share repurchase program, partially offset by shares issued for employee stock plans. The company repurchased $105 million or 2 million shares in the first quarter. oCash flow from operating activities for the first quarter was $135 million. First quarter capital expenditures were $24 million, offset by $37 million of cash proceeds from the sale of assets, resulting in free cash flow of $148 million. The company ended the quarter with $293 million in cash and short-term investments. Business Group and Regional Highlights oResearch Consumables revenue was $409 million in the first quarter, a decrease of 3 percent compared to the prior year. Excluding the impact from currency, revenue for the business group declined 1 percent. The decline in growth for the quarter was primarily driven by cautious spending in the U.S. and Europe and a tough comparison to prior year in Japan, which benefited from stimulus spending in Q1 2012. oGenetic Analysis revenue was $365 million in the first quarter, an increase of 3 percent over the same period last year. Excluding the impact from currency, revenue increased 5 percent. Growth for the quarter was primarily driven by an increase in our Ion Torrent business and royalties including licensing agreements, partially offset by lower CE instrument sales and an expected decline in SOLiD product sales. oApplied Sciences revenue was $189 million in the first quarter, an increase of 17 percent over the same period last year. Excluding the impact from currency, revenue increased 19 percent. Growth for the quarter was primarily driven by sales in Bioproduction and Forensics products. oRegional revenue growth rates excluding currency for the first quarter compared to the same quarter of the prior year were as follows: the Americas grew 5 percent, Europe grew 3 percent, Asia Pacific grew 10 percent and Japan grew 1 percent. The Americas benefited from increased sales in Ion Torrent, Forensics, Bioproduction and higher royalties including licensing agreements. Europe saw growth in Forensics and Bioproduction, offset by lower Research Consumables. Asia Pacific grew across all business groups primarily due to Ion Torrent, Research Consumables, and Bioproduction. Japan growth was primarily due to Ion Torrent and Bioproduction sales, offset by lower sales from government stimulus programs that took place in the same period last year. Outlook The Company anticipates revenue in the range of $950 million to $955 million and non-GAAP diluted earnings per share in the range of $0.94 to $0.97 for the quarter ending June 30, 2013, due to the impact from the fluctuations in currency rates, and the timing of operating expenses and larger deals compared to the guidance provided on February 4, 2013. Based on March 31, 2013 rates, currency is expected to have a negative impact of $62 million to revenue and a negative $0.15 impact to non-GAAP EPS for the full year. Conference Calls Given the recent announcement that Life Technologies and Thermo Fisher have entered into a definitive merger agreement under which Thermo Fisher will acquire all of the outstanding shares of Life Technologies for $76.00 per share in cash, the Company will no longer hold conference calls for its quarterly and annual earnings. The transaction, which is expected to close early in 2014, is subject to a Life shareholder vote and satisfying customary closing conditions, including regulatory approvals. About Life Technologies Life Technologies Corporation(NASDAQ:LIFE) is a global biotechnology company that is committed to providing the most innovative products and services to leading customers in the fields of scientific research, genetic analysis and applied sciences. With a presence in more than 180 countries, the company's portfolio of 50,000 end-to-end solutions are secured by more than 5,000 patents and licenses that span the entire biological spectrum -- scientific exploration, molecular diagnostics, 21stcentury forensics, regenerative medicine and agricultural research. Life Technologies has approximately 10,000 employees and had sales of $3.8 billion in 2012. Visit us at our website:http://www.lifetechnologies.com. Safe Harbor Statement Certain statements contained in this press release are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, and Life Technologies intends that such forward-looking statements be subject to the safe harbor created thereby.Forward-looking statements may be identified by words such as "expects," "anticipates," "intends," "plans," "believes," "seeks," "estimates," "will," or words of similar meaning and include, but are not limited to, statements about the expected future business and financial performance of the company and statements regarding the proposed acquisition of Life Technologies by Thermo Fisher. Such forward-looking statements include, but are not limited to, statements relating to financial projections, including revenue and pro forma EPS projections; success of acquired businesses, including cost and revenue synergies; development and increased flow of new products; leveraging technology and personnel; advanced opportunities and efficiencies; opportunities for growth; expectations of prospective new standards, new delivery platforms, and new selling specialization and effectiveness; plans and prospects for the company; corporate strategy and performance; and the expected timetable for completing the transaction with Thermo Fisher.A number of the matters discussed in this press release and presentation that are not historical or current facts deal with potential future circumstances and developments, including future research and development plans. The discussion of such matters is qualified by the inherent risks and uncertainties surrounding future expectations generally and other factors that could cause actual results to differ materiallyfrom future results expressed or implied by such forward-looking statements. Such risks and uncertainties include, but are not limited to: volatility of the financial markets; and the risks that are described from time to time in Life Technologies' reports filed with the SEC.This press release and presentation speaks only as of its date, and the company disclaims any duty to update the information herein. All products referenced are for Research Use Only and not intended for use in diagnostic procedures, unless otherwise noted. Non-GAAP Measurements This discussion includes certain financial information which constitutes "non-GAAP financial measures" as defined by the SEC. The GAAP measures which are most directly comparable to these measures, as well as a reconciliation of these measures with the most directly comparable GAAP measures, can be found at on the Investor Relations portion of the company's website at www.lifetechnologies.com. Additional Information and Where to Find It This communication may be deemed to be solicitation material in respect of the proposed acquisition of Life Technologies by Thermo Fisher. In connection with the proposed acquisition, Life Technologies intends to file relevant materials with the SEC, including Life Technologies' proxy statement in preliminary and definitive form. Stockholders of Life Technologies are urged to read all relevant documents filed with the SEC, including Life Technologies' definitive proxy statement, because they will contain important information about the proposed transaction. Investors and security holders are able to obtain the documents (once available) free of charge at the SEC's web site, http://www.sec.gov, or for free from Life Technologies by contacting investor relations at (760) 603-7208 or firstname.lastname@example.org. Such documents are not currently available. Participants in Solicitation Thermo Fisher and its directors and executive officers, and Life Technologies and its directors and executive officers, may be deemed to be participants in the solicitation of proxies from the holders of Life Technologies common stock in respect of the proposed transaction. Information about the directors and executive officers of Thermo Fisher is set forth in its proxy statement for Thermo Fisher's 2013 Annual Meeting of stockholders, which was filed with the SEC on April 9, 2013. Information about the directors and executive officers of Life Technologies is set forth in the proxy statement for Life Technologies' 2013 Annual Meeting of stockholders, which was filed with the SEC on March 15, 2013. Investors may obtain additional information regarding the interest of such participants by reading the proxy statement regarding the acquisition (once available). (Logo: http://photos.prnewswire.com/prnh/20110216/MM49339LOGO) Investor and Financial Contact Carol Cox Investor Relations (760) 603-7208 email@example.com LIFE TECHNOLOGIES CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS For the three For the three months ended months ended (in thousands, except per share data) March 31, 2013 March31, 2012 (unaudited) Revenues $ $ 939,114 962,512 Cost of revenues 326,014 313,681 Purchased intangibles amortization 72,380 72,106 Gross profit 564,118 553,327 Gross margin 58.6% 58.9% Operating expenses: Selling, general and administrative 271,216 253,398 Research and development 83,546 88,598 Business consolidation costs 26,689 14,266 Total operating expenses 381,451 356,262 Operating income 182,667 197,065 Operating margin 19.0% 21.0% Interest income 471 764 Interest expense (29,365) (35,738) Other expense, net (2,476) (5,716) Total other expense, net (31,370) (40,690) Income from operations before provision for income taxes 151,297 156,375 Income tax provision (30,188) (23,736) Net income 121,109 132,639 Net loss attributable to 87 - non-controlling interests Net income attributable to $ 121,196 $ 132,639 controlling interest Effective tax rate 20.0% 15.2% Add back interest expense for subordinated debt, net of tax - 12 Numerator for diluted earnings per share $ 121,196 $ 132,651 Earnings per common share: Basic earnings per share attributable to $ $ controlling interest 0.71 0.74 Diluted earnings per share attributable to $ $ controlling interest 0.69 0.72 Weighted average shares used in per share calculation: Basic 170,807 178,873 Diluted 174,481 183,113 LIFE TECHNOLOGIES CORPORATION ITEMIZED RECONCILIATION BETWEEN GAAP AND NON-GAAP NET INCOME For the three For the three months ended months ended (in thousands, except per share data) March 31, 2013 March31, 2012 (unaudited) GAAP net income $ $ 121,109 132,639 Non-GAAP revenue Adjustments Purchase accounting related 341 364 adjustments Charges on a discontinued - (457) product Total Non-GAAP revenue Adjustments 341 ^(1) (93) ^(1) Non-GAAP cost of revenues and purchased intangible Adjustments Purchased intangibles 72,380 72,106 amortization Purchase accounting related 733 - adjustments Licensing settlement - (169) Total Non-GAAP cost of revenues and 73,113 ^(2) 71,937 ^(2) purchased intangible Adjustments Non-GAAP Operating Expense Adjustments Purchase accounting related 505 927 adjustments Business consolidation 26,689 14,266 costs Licensing settlement - (934) Total Non-GAAP Operating Expense 27,194 ^(3) 14,259 ^(3) Adjustments Non-GAAP Other Expense Adjustments Noncash interest expense - 5,382 charges Other expense - 5,297 Total Non-GAAP Other Expense - 10,679 ^(4) Adjustments Non-GAAP Income Tax Provision Adjustments Income tax adjustments (35,696) (48,076) Total Non-GAAP Income Tax Provision (35,696) ^(5) (48,076) ^(5) Adjustments Non-GAAP Net Income $ $ 186,061 181,345 Non-GAAP loss attributable to 87 ^(6) - non-controlling interest Non-GAAP Net Income Attributable to $ $ Controlling Interest 186,148 181,345 Add back of interest expense for - 12 subordinated debt, net of tax Non-GAAP Numerator for diluted earnings $ $ per share 186,148 181,357 Non-GAAP Earnings per common share: Basic earnings per share attributable $ $ to controlling interest 1.09 1.01 Diluted earnings per share $ $ attributable to controlling interest 1.07 0.99 Weighted average shares used in per share calculation: Basic 170,807 178,873 Diluted 174,481 183,113 Summary of Reconciliation between GAAP and Non-GAAP Net Income For the three months ended March 31, 2013, Non-GAAP earnings resulted in total revenue of $962.9 million, gross profit of $637.6 million with gross margin of 66.2%, operating profit of $283.3 million with operating margin of 29.4%, and an income tax provision of $65.9 million with the Non-GAAP effective tax rate of 26.2% with the above adjustments. For the three months ended March 31, 2012, Non-GAAP earnings resulted in total revenue of $939.0 million, gross profit of $625.2 million with gross margin of 66.6%, operating profit of $283.2 million with operating margin of 30.2%, and an income tax provision of $71.8 million with the Non-GAAP effective tax rate of 28.4% with the above adjustments. Notes Add back purchased deferred revenue of $0.3 million and $0.4 million ^(1) for the three months ended March 31, 2013 and 2012, respectively. Adjust for revenue related to a discontinued product of $0.5 million for the three months ended March 31, 2012. Add back amortization of purchased intangibles of $72.4 million and amortization of a fair value inventory write-up of $0.8 million, offset by contingent consideration remeasurement of $0.1 million for ^(2) the three months ended March 31, 2013. Add back amortization of purchased intangibles of $72.1 million and adjust for royalty fees and compensation costs of $0.2 million as a result of a licensing settlement for the three months ended March 31, 2012. Add back depreciation of purchase accounting property, plant, and equipment revaluation of $0.5 million for the three months ended March 31, 2013. Add back depreciation of purchase accounting property, plant, and equipment revaluation of $0.9 million, offset by compensation costs of $0.9 million as a result of licensing ^(3) settlement for the three months ended March 31, 2012. Add back business consolidation costs including restructuring and integrating acquired entities, aligning acquired and existing operations through business transformation activities and costs associated with divesting entities of $26.7 million and $14.3 million for the three months ended March 31, 2013 and 2012, respectively. Add back charges associated with a divestiture activity of $5.3 million, charges related to non-cash interest expense for senior ^(4) convertible debts of $1.7 million and the extinguishment of a line of credit facility of $3.7 million for the three months ended March 31, 2012. Non-GAAP tax adjustment due to the exclusion of the aforementioned business combination related charges, non cash charges, and one-time ^(5) costs which are not indicative of the profitability or cash flows of the Company's ongoing or future operations. These deductions produce a GAAP only tax benefit which is added back for Non-GAAP presentation. ^(6) Non-GAAP net loss attributable to non-controlling interest, net of tax benefit. The Company reports Non-GAAP results which excludes costs that are not indicative of the profitability or cash flows of the Company's ongoing or future operations. Such costs are restructuring cost, business transformation expenses, amortization and depreciation of deferred revenue, intangibles assets, and fixed assets, and revaluation charges for inventories, contingent consideration liabilities, asset impairments, and in process research and development expenses, incurred as a result of business combinations as well as the impact from the divestiture and discontinuance of product lines. The Company also excludes noncash interest expense associated with convertible debt bifurcation and noncash charges associated with non-controlling interests. In addition, the Company excludes one-time costs including the early repayment of debt and the associated impacts, and the impact of certain settlements in order to provide a supplemental comparison of the results of operations. LIFE TECHNOLOGIES CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS For the three months ended March 31, (in thousands)(unaudited) 2013 2012 Net income $ 121,109 $ 132,639 Add back amortization and share-based compensation 92,820 92,962 Add back depreciation 30,813 31,459 Balance sheet changes (93,055) (62,939) Other noncash adjustments (16,968) (90,205) Net cash provided by operating activities 134,719 103,916 Capital expenditures (23,606) (25,334) Proceeds from sale of assets 36,729 328 Free cash flow 147,842 78,910 Net cash used in investing activities (43,511) (39,417) Net cash used in financing activities (95,346) (663,372) Effect of exchange rate changes on cash (2,741) 4,129 Net (decrease) increase in cash and cash equivalents $ 6,244 $ (619,750) LIFE TECHNOLOGIES CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS March 31, December 31, (in thousands) 2013 2012 ASSETS (unaudited) Current assets: Cash and short-term investments $ 292,612 $ 276,369 Trade accounts receivable, net of 691,679 697,228 allowance for doubtful accounts Inventories 407,455 403,488 Prepaid expenses and other current assets 277,716 248,154 Total current assets 1,669,462 1,625,239 Long-term assets 6,869,586 7,012,826 Total assets $ 8,539,048 $ 8,638,065 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Current portion of long-term debt $ 4,048 $ 253,214 Short-term borrowings 324,004 100,000 Accounts payable, accrued expenses and 743,064 839,137 other current liabilities Total current liabilities 1,071,116 1,192,351 Long-term debt 2,068,979 2,060,855 Other long-term liabilities 712,632 731,396 Stockholders' equity 4,686,321 4,653,463 Total liabilities and stockholders' $ 8,539,048 $ 8,638,065 equity SOURCE Life Technologies Corporation Website: http://www.lifetechnologies.com
Life Technologies Announces First Quarter 2013 Results
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